CALGARY, May 28, 2020 /CNW/ - Nanalysis Scientific
Corp. ("the Company", TSXV: NSCI, OTCQX: NSCIF, FRA: 1N1)
released today its first quarter 2020 results.
|
Three months ended
March 31
|
($000's)
|
2020
|
2019
|
($) Change
|
|
|
|
|
Revenue
|
1,523
|
2,065
|
(542)
|
Cost of products
sold
|
541
|
730
|
(189)
|
Gross
profit
|
982
|
1,335
|
(353)
|
|
|
|
|
Expenses
|
|
|
|
Sales and
marketing
|
681
|
667
|
14
|
General and
adminstration
|
765
|
513
|
252
|
Earnings (loss)
before other items
|
(464)
|
155
|
(619)
|
|
|
|
|
Other
Items
|
|
|
|
Acquisition
transaction costs
|
233
|
-
|
233
|
RTO transaction
costs
|
-
|
64
|
(64)
|
Depreciation annd
amortization expense
|
499
|
162
|
337
|
Finance expense
(income)
|
(86)
|
15
|
(101)
|
Stock-based
compensation
|
62
|
54
|
8
|
Foreign exchange
(gain) loss
|
(169)
|
61
|
(230)
|
Loss before
tax
|
(1,003)
|
(201)
|
(802)
|
Deferred tax
recovery
|
(93)
|
-
|
(93)
|
Net
loss
|
(910)
|
(201)
|
(709)
|
Other comprehensive
loss
|
(25)
|
-
|
(25)
|
Total
comprehensive loss
|
(935)
|
(201)
|
(734)
|
BUSINESS ACQUSITION
On March 3,
2020, the Company acquired all of the outstanding shares of
RS2D S.A.S. ("RS2D"), a technology company based
in Strasbourg, France that designs and builds
cutting-edge NMR and MRI electronics components for precision
analytical instruments. The base consideration paid for RS2D was
$1.9 million in cash and the issuance
of 2.9 million Nanalysis shares, which are subject to a three-year
lock-up period restricting the sale of shares for specific periods.
The former shareholders of RS2D may also receive an earnout over
the three years to December 31, 2022, based on future revenue
growth objectives. RS2D provides Nanalysis with a key module
for its next generation electronics platform, which will ship with
the future products including the new 100 MHz product. RS2D also
expands the Company's product portfolio with its Pulse console for
high-field NMR systems. Further, RS2D moves Nanalysis fully into
the MRI space, expanding the company's total addressable market.
Full integration of the companies has been completed, highlighted
by two RS2D executives taking important leadership positions:
Remy Schimpf as Senior VP of Sales,
and Julien Muller as Chief
Technology Officer.
OVERALL PERFORMANCE
For the three months ended
March 31, 2020, the Company reported
consolidated revenue of $1,523k, a
decrease of $542k over the
$2,065k for the comparable period
ended March 31, 2019. Unearned
revenue was $2,102k as at
March 31, 2020, an increase of
$1,486k from $616k as at December
31, 2019. The increase was due to customer deposits on
pre-orders for the 100MHz product, an increase in extended warranty
sales to customers and a backlog of work for RS2D that was delayed
due to the novel coronavirus ("COVID-19") restrictions. The
decrease in revenue was partially a result from COVID-19 as local,
national, and international regulations have made conducting
business difficult amid 'shut down and shelter in place' orders.
Nanalysis was unable to deliver some international shipments due to
closures at the border, while RS2D employees in Strasbourg, France were unable service
customers as all nonessential services were ceased. Also
contributing to the reduction in revenue is customers holding off
on purchases and awaiting the release of the 100MHz device.
Gross profit for the three months ended March 31, 2020 was $982k (a margin of 64%) compared to gross profit
of $1,335k (a margin of 65%) for
2019.
The Company's comprehensive loss for the three months ended was
$935k as compared to comprehensive
loss of $201k in 2019. The majority
of the increased loss was due to decreased sales, increased
depreciation and amortization, acquisition transaction costs,
increase general and administration expense, partially offset by an
increase on foreign exchange gain and finance income.
FINANCIAL POSITION
At March 31,
2020, Nanalysis had $5,423K
(December 31, 2019 - $8,534k) in working capital, including
$5,326k (December 31, 2019 - $6,619k) in cash. The Company has an undrawn line
of credit of $2,000k and $1,312k of available borrowing on the Western
Economic Diversification Canada interest free loan. Subsequent to
March 31, 2020 the Company received
$188k from the Canadian Emergency
Wage Subsidy ("CEWS") for the payroll period of March 15th to April 11th, 2020. Nanalysis'
business has been affected by COVID-19 and as such is eligible for
the March 15th to April 11th, a
subsidy of 75% of employees' wages. Nanalysis will continue to
monitor revenues and seek government assistance where
applicable.
OUTLOOK
The Company is addressing the recent outbreak
of COVID-19 and the related economic and social disruption,
disruption to global supply chains, and the ability to directly and
indirectly staff the Company's day-to-day operations. Local,
national, and international regulations have made conducting
business difficult amid 'shut down and shelter in place' orders.
Despite shut down orders, the Company was able to continue the
development and manufacturing aspects of the business and have
continued development on the 100MHz device. Government health
regulations will have a negative impact on the Company's short-term
performance, but the Company remains in a strong financial position
with ample cash on hand.
Sean Krakiwksy, CEO of the Company states "Despite the recent
disruption to our business stemming from the COVID-19 outbreak, we
continue to manufacture product and to make significant progress on
the 100Mhz device. We are pleased to announce that to date, we have
received $1,924k pre-orders for our
100MHz, of which $303k was reflected
in unearned revenue as at March 31,
2020. This speaks volumes to the accomplishments of our team
and demonstrates that there is demand and excitement for this
product. There are four main themes to shareholder value creation
that we are committed to for the remainder of 2020: (1) release of
our new 100 MHz product, (2) continued execution of our acquisition
strategy, (3) continued vertical market partnering agreements, and
(4) expanding investor relations activity, especially in
the United States in keeping with
our recent OTCQX listing."
The Company has utilized government programs offered to
Company's impacted by COVD-19, specifically the CEWS and Canadian
Emergency Business Account. Nanalysis will continue to monitor
results and seek government assistance where
applicable.
Despite short-term forces presenting new challenges, the Company
continues to have confidence that the market for compact NMR
spectrometers and related accessories and services will grow for
the next two decades. The nascent nature of the opportunity coupled
with the value proposition to customers will continue to drive
increased demand for compact NMR.
About Nanalysis Scientific Corp. (TSXV: NSCI, OTCQX:
NSCIF, FRA: 1N1)
The Company trades on the TSX Venture Exchange (TSXV) in
Canada with ticker symbol 'NSCI'
and over the counter in the United
States under the ticker symbol 'NSCIF'.
Nanalysis business is what we term "MRI for industry": It
develops and manufactures portable Nuclear Magnetic Resonance (NMR)
spectrometers or analyzers for laboratory and industrial markets.
The NMReady60™ was the first fully featured portable NMR
spectrometer in a single compact enclosure requiring no liquid
helium or any other cryogens, and the company continues to develop
new products and has a strong innovation pipeline. Nanalysis began
taking orders for the 100MHz device in early 2020. The Company's
new device will be the most powerful non-cryogen, permanent magnet
compact NMR device ever brought to market. Nanalysis devices are
used by chemical professionals in many industries (oil and gas,
chemical, mining, pharma, biotech, flavor and fragrances,
agrochemicals, and more) as well as numerous government and
university research labs around the world. The company continues to
exploit new global market opportunities both independently and with
partners.
March 2020, the Company acquired
all outstanding shares of RS2D, a complementary technology company
based in Strasbourg France that
specializes in the development of cutting-edge MR
electronics. Based on a single electronic board, RS2D has
developed MR product lines in high-field ("HF") NMR and magnetic
resonance imaging ("MRI") that can further advance Nanalysis'
existing product line, while the new products to round out the
Company's magnetic resonance technology portfolio.
Notice regarding Forward Looking Statements and Legal
Disclaimer
This news release contains certain "forward-looking statements"
within the meaning of such statements under applicable securities
law. Forward-looking statements are frequently characterized by
words such as "anticipates", "plan", "continue", "expect",
"project", "intend", "believe", "anticipate", "estimate", "may",
"will", "potential", "proposed", "positioned" and other similar
words, or statements that certain events or conditions "may" or
"will" occur. These statements are only predictions. Various
assumptions were used in drawing the conclusions or making the
projections contained in the forward-looking statements throughout
this news release. Forward-looking statements are based on the
opinions and estimates of management at the date the statements are
made and are subject to a variety of risks and uncertainties and
other factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
The Company is under no obligation, and expressly disclaims any
intention or obligation, to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services
Provider accepts responsibility for the adequacy or accuracy of
this release.
SOURCE Nanalysis Scientific Corp.